The Man Without Qualities has been skeptical of the new Securities and Exchange Comission (SEC) requirment that the Chief Executive Officer and Chief Financial Office of large public companies personally certify the company's securities filings under oath penalty of perjury. The media balleyhooed the significance of this new rule. It has been and continues to be my belief that if the new rule has effects at all they will mostly be perverse. Now arrives a note from Max Power drawing my attention to an interesting article which suggests that the new rule has had no effect. That is, indications so far are that the market is "perfect" enough to drop a rock on the regulators:

On June 27, 2002, the Securities and Exchange Commission of the United States ordered the CEOs and CFOs of 688 large firms to certify the earnings numbers of their companies by 5:30 PM EST, August 14, 2002. Our paper finds that certification was not only a non-event for the certifiers around their certification date, but it was also a non-event for the non-certifiers around August 15, 2002. There could be a number of reasons why this occurred. Cross-sectional and time-series evidence, however, supports just one hypothesis: the market had separated firms with good earnings transparency from firms with bad earnings transparency before the SEC order of June 27, 2002. The SEC order did not help, but neither did it hinder, the market's ability to differentiate further between these two types of firms.